At the 21st Annual Becker's ASC Conference in Chicago on Oct. 23, Vivek Taparia, MBA, director of operations of Regent Surgical Health, discussed the factors that influence the conversion of an ambulatory surgical center to a hospital outpatient department, and factors that prevent conversion.
Regent Surgical Health offers services to develop and manage ASCs across the United States and Europe. The company currently owns 21 ASCs, 16 of which are joint ventures with hospitals. While most of the company's operations are focused on developing ASCs, Regent Surgical Health is sometimes involved in converting ASCs into hospital outpatient departments.
According to Mr. Taparia, about one third of ASC closures in the last 15 years can be attributed to conversions to HOPDs. Various factors influence an ASC's decision to convert to a HOPD, Mr. Taparia explained. ASC reimbursements from Medicare as a percentage of HOPD reimbursement has declined from 87 percent in 2003 to 55 percent in 2014. Health system employment strategies are not conducive to the joint venture model and are a driving force behind conversion, along with hospital partners who are unable to assist in the attainment of the ASC's anticipated reimbursement. Lastly, if an ASC is part of a new parent health system that does not share the same physician alignment strategy, ASC operators may see greater reason to convert to HOPDs.
Mr. Taparia also discussed factors that frequently impede the conversion of an ASC to an HOPD.
"Location rules." An ASC must be located within 250 yards of the hospital provider's main buildings, or the entity must be located within a 35-mile radius of the provider and meet off-campus designations. Also, the physical facility must meet HOPD standards. The third major obstacle to HOPD conversion can occur is if the state has a certificate of need board which needs to approve the change in ownership.
"Converting an ASC into a HOPD is basically like launching an ASC all over again but making sure everything complies with the practices of the hospitals," Mr. Taparia said. "The critical success factor is making sure you have continuous meetings with the respective department of the hospital to make sure all of the t's are crossed and i's dotted."